HADLEY — An upgraded bond rating for Hadley may help to lower borrowing costs as the town takes out over $8 million in loans for projects, including bonds for constructing a new senior center and fire substation.
Town Administrator David Nixon said Monday that Standard and Poor’s Global Ratings recently upgraded the town’s rating for outstanding general obligation bonds from AA+ to AAA.
What this means, Nixon said, is an increased likelihood that the borrowing will be done at a lower interest rate and that bond bidders will bid on the entire borrowing amount, which makes financing more straightforward and less complicated.
On Wednesday, the Select Board will be asked to authorize general obligation bonds totaling $8.15 million, which will finance portions of the senior center and fire substation buildings, as well as stormwater improvement and school renovation projects.
Treasurer Linda Sanderson said all bond bidders came in at under a 3 percent interest rate, meaning that the borrowing costs will stay within parameters promised to taxpayers.
“We’re really happy with that,” Sanderson said.
While Sanderson said she can’t be sure the interest rates would be higher, the higher bond rating puts Hadley in a more favorable position and probably attracted a larger number of bidders, she said.
In the report from Thomas J. Zemetis, primary credit analyst for S&P, and Lauren B. Carter, S&P’s secondary contact, they write that the higher bond rating “reflects our view of the town’s maintenance of very strong budgetary flexibility through historically balanced financial operations with available reserves at 16 percent of general fund expenditures, which is enhanced by a low overall property tax rate and capacity to increase revenue to support future operations and capital needs.”
Nixon said this higher bond rating could have a positive spillover effect to the town’s business climate, and home values, and may also be beneficial for institutions based in Hadley, such as the University of Massachusetts, where a portion of the campus is on land located in town.
In addition, Nixon said the rating speaks to the long-term stability of Hadley’s tax rate and gives the town the ability to handled unexpected expenses in the future.
Nixon said many officials worked hard to make the improved bond rating happen.
“It’s something the community can feel good about,” Nixon said.
The AAA rating comes with a stable outlook, meaning the rating shouldn’t change soon. “The stable outlook reflects our view of Hadley’s overall strong financial practices and policies, which have contributed to generally stable and predictable budgetary performance, and support its very strong budgetary flexibility and liquidity over the outlook period,” Zemetis and Carter write.
Hadley becomes one of the few towns in the region with a AAA rating, with Northampton and Great Barrington among the others.
Scott Merzbach can be reached at smerzbach@gazettenet.com.
